Have The Markets Topped?

Earnings Roundup

Apollo Hospitals (+9%) Q2 results blew past estimates. Higher occupancy levels and pickup in pickup in non-COVID business aided the overall growth. The group will acquire a controlling stake in Excelcare Hospitals. 🏥 Here are its key stats:

• Revenue: Rs 3,717 cr; + 5% YoY (vs Est: Rs 3,537 cr)
• EBITDA: Rs 615 cr; +23% YoY (vs Est: Rs 501 cr)
• EBITDA Margin: 16.5% (vs Est: 14.2%)
• Net Profit: Rs 267 cr; +39% YoY (vs Est: Rs 192 cr)

Going forward, Apollo Hospital’s strong brand, market share gains, and focus on digitization are key positives. 

Apollo Hospitals is +111% YTD. 📈

Nykaa’s (-3%) Q2 results were mixed. Gross merchandise value (GMV) of the beauty and personal care segment rose 38% YoY. Monthly average unique visitors increased 62% over the previous year to 21 million. But, a sharp jump in ad spends (+4x) impacted its bottomline. 😓 Here’s more details: 

• Revenue: Rs 885 cr; +47% YoY 
• EBITDA: Rs 28.8 cr; -48% YoY
• EBITDA Margin: 3.3% vs 9.1% YoY
• Net Profit: Rs 1.2 cr; -95% YoY

Nykaa remains focused on expanding its retail presence and added 8 new stores in Q2. 💪 The company also acquired a majority stake in D2C (direct to consumer) beauty brand, Dot & Key. 

In the short term, the company hasn’t planned any acquisitions. Investors will watchout for improvements in profitability. Separately, the company announced that promoter Falguni Nayar Family Trust pledged 4% of its holding as security against loans. 🙃

Turning Cautious

CLSA sounded off the alarm bells in its recent report. The global brokerage firm believes that the rally in Indian equities is all but over and even advised investors to book profits. No shit! 😢

CLSA cites multiple reasons like steep valuations, the impact of higher costs on margins, and a weaker rupee for its bearish stance. Fears of an interest rate hike in April 2022 is also a key concern. 👎

Why does it matter? In recent days, large investment firms like Nomura, Morgan Stanley, and Goldman Sachs have also turned cautious on Indian equities. Last month, Foreign Institutional Investors (FIIs) sold stocks worth $1.8 billion, which is the highest since the start of the pandemic. 🔻

The last 18 months have been fantastic for equity markets. Both Nifty and Sensex have +2x from their pandemic lows. Several midcap and smallcap stocks have delivered multibagger returns. But, as they say, all good things must come to an end. Let’s see how this goes. 😬

Finding Its Mojo Back?

IRCTC (+5%) broke out after trading sideways for the past few weeks. So what got the stock excited? The Indian railways announced that it will resume regular train services after nearly 20 months! Nearly 1,800 long-distance mail/express trains will restart over the coming week in a phased manner. 👍

Easing restrictions and record vaccinations have boosted travel demand. IRCTC is the only company authorized by Indian Railways to offer catering services, online tickets, and packaged drinking water at stations and trains. More trains = more revenue! Also, recent reports of IRCTC’s inclusion in the MSCI Index is positive. ✅

IRCTC has been an investor favorite stock from Day 1. It surged +15x since its listing in October 2019. But a recent issue on the sharing of booking commissions saw the stock drop 30%. The proposal was immediately withdrawn but investors haven’t been so enthusiastic since then. Will this be the start of a new journey for IRCTC’s stock? 🤞🏻

Earnings Highlights

Hero MotoCorp: Revenue: Rs 8,453 cr; (-10% YoY) | Net Profit: Rs 794 cr; (-17% YoY)

Manappuram Finance: Net Interest Income: Rs 1,479 cr (-4% YoY) | Net Profit: Rs 370 cr (-9% YoY)

 PI Ind: Revenue: Rs 1,158 cr (+17% YoY) | Net Profit: Rs 218 cr (+6% YoY)

JK Cement: Revenue: Rs 1,835 cr (+18% YoY) | Net Profit: Rs 169 cr (-25% YoY)